RETAILERS REPORT SICKLY SPINACH SALES

LYNNE MILLER

NEW YORK - The contaminated spinach outbreak continued to take a toll last week, as companies faced mounting losses and consumer groups and lawmakers demanded more industry regulation and oversight.

Authorities had not pinpointed the exact cause of the outbreak that has sickened close to 200 people and caused at least three deaths. In an unrelated development last week, the safety of leafy greens made headlines again after the Salinas, Calif.-based Nunes Co. initiated a voluntary recall of lettuce in response to discovering E. coli contamination of water used to irrigate the lettuce plants. No illnesses had been reported, and investigators had not determined whether the bacteria was the dangerous 0157:H7 strain.

The outbreak's impact could be felt on different levels. In the U.S., many consumers were taking a pass on bagged spinach and packaged salads. Canada, the largest export market for American spinach, has imposed a ban on imports. In 2002, Canada purchased more than $50 million of the leafy green from the states, according to the Produce Marketing Association, Newark, Del.

An industry observer, who had estimated the outbreak could cost $50 million to $100 million a month, said real losses could exceed that estimate.

"When all is said and done, you'll find considerably greater losses have been caused to the bagged salad category than just to spinach alone," said Bryan Silbermann, president of the PMA. "That's for a couple of reasons. One reason is spinach is a component of some bagged salads. No. 2, a fairly sizeable number of consumers are saying, 'I'm not going to eat bagged salads.'"

In stores carrying spinach, retailers reported weak movement, and some slippage in sales of bagged salads.

"Sales of bagged salads are down 10% to 15%," said Paul Kneeland, director of produce for Roche Bros., the Wellesley Hills, Mass.-based chain of 17 stores. Spinach sales "are trickling in. I can't say they've returned in earnest. They're only a fraction of what they were. There are no impulse sales in spinach right now. It's the hard-core spinach customer that's come back. It's a sad situation."

Kowalski's Market stores brought spinach back to the produce departments and were using it as an ingredient in prepared foods sold in the store delis. While spinach sales were down, officials said they had not noticed a remarkable drop in demand for other types of packaged salads. One store manager reported seeing about one-third to one-half of the normal movement for bagged spinach.

"Don't get me wrong, they're not buying the spinach," said Dean Balzum, director of produce for Kowalski's, St. Paul, Minn. "But if they bought a Caesar [salad] before, they're still buying a Caesar. I would have thought we would have taken a noticeably larger hit, and it hasn't been as bad as I thought it would be. [Packaged salads] are a huge category for us, and a very important category."

Salisbury, N.C.-based Food Lion had no fresh spinach in its stores, but was expecting deliveries late last week. While some store managers reported "hesitancy" on the part of shoppers to buy bagged salads, overall sales did not appear to be impacted much, said company spokesman Jeff Lowrance.

"We're not seeing [a decline] chainwide," he said. "What we've found is all the information put out by the [U.S. Food and Drug Administration] did a good job informing consumers. We didn't see a significant impact on bagged salads because it was explained well that the product in question was spinach."

In California, a state Senate committee last week sponsored a hearing to review whether industry and government are doing enough to prevent and respond to outbreaks of food contamination. Consumer groups called for stronger regulations for food producers, and criticized the government for taking a voluntary approach to developing guidelines for growers.

Such reactions are to be expected whenever there are outbreaks of foodborne illness, Silbermann said.

"It's inevitable that folks jump on the bandwagon and try to use it for political advantage, whether that's to argue for regulation, or to argue for a single food safety agency, or for more money for the FDA," he said.

"The industry has ramped up over the last couple of years its use of good agricultural practices, and developed commodity guidelines working with the FDA," Silbermann added. "It's up to the industry to prove that we are taking those seriously. If that means some form of verification that everybody is following them, then we should consider that."